Home >Documents >The Price System ( Markets)

The Price System ( Markets)

Date post:06-Feb-2016
Category:
View:20 times
Description:
The Price System ( Markets). Economics Unit 4, Lesson 1. Potential Buyers. Potential Sellers. Markets The interaction of buyers and sellers determines the price and quantity of most goods in a market system. - PowerPoint PPT Presentation
Transcript:
• The Price System (Markets)2012, TESCCCEconomics Unit 4, Lesson 1

The interaction of buyers and sellers determines the price and quantity of most goods in a market system.2012, TESCCC

• Buyers and sellers have opposite goals.Buyers want the lowest price.Sellers want the highest price.2012, TESCCC

• MarketsDraw Supply & Demand Demand Schedule \$ QD 10.00 60 20.00 40 30.00 20 Supply Schedule \$ QS 10.00 20 20.00 40 30.00 602012, TESCCC

• MarketD

S\$EP 2040EQQ302060102012, TESCCC

• With supply and demand both on graph, we now have a market.

Market equilibrium where quantity demanded and quantity supplied are equal2012, TESCCC

• Based on 2 AssumptionsEverything in market has a price. Price is best measure to answer the three basic economic questions.2012, TESCCC

• Prices act as signals.Signals to adjustDemand Supply2012, TESCCC

• Disequilibrium QS = QD This creates a shortage or a surplus.2012, TESCCC

• SurplusA price above equilibrium creates a surplus.A surplus is when QS is greater than QD.2012, TESCCC

• Surplus Excess Supply QS > QDD

SPEP 2040EQQQDQS302012, TESCCC

• ShortageA price below equilibrium created a shortage.Shortage is when QD is greater than QS.2012, TESCCC

• Shortage Excess Demand QD > QSD

S\$EP2040EQQQSQD102012, TESCCC

• ObjectivesIdentify the determinant that causes a change in equilibrium price.Construct a market, and graph a change in supply and demand with new equilibrium.2012, TESCCC

• What does it take to make a market?Buyer = demandSeller= Supply Draw a market and label PQS & D EP & EQ2012, TESCCC

• Product: ToothpasteSD

\$EQEEPQ2012, TESCCC

• Show what would happen if Crest has a very successful ad campaign. Change in D?or Change in S?2012, TESCCC

• Product: ToothpasteSD1\$QE1EP1EQ12012, TESCCC

• Product: ToothpasteSD1\$QE1E2D2EP2EP1EQ2EQ12012, TESCCC

• What happened to EP? IncreasedTo EQ?Increased

So we can generalize and say if D EP EQ 2012, TESCCC

• Show what would happen if the price of seaweed goes up. Change in D?or Change in S?2012, TESCCC

• Product: ToothpasteSD1\$QE1EP1EQ12012, TESCCC

• Product: ToothpasteS1D1\$QE1EP1EQ1S2E2EP2EQ22012, TESCCC

• This was caused by a change in the cost of inputs. Seaweed is a major ingredient of toothpaste.2012, TESCCC

• What happened to EP? Increased

To EQ?Decreased

So we can generalize and say if S EP EQ 2012, TESCCC

• Show what would happen if a new machine can harvest seaweed faster and cheaper. Change in D?or Change in S?2012, TESCCC

• Product: ToothpasteSD1\$QE1EP1EQ12012, TESCCC

• Product: ToothpasteS1D1\$QE1EP1EQ1 EQ2S2EP22012, TESCCC

• What happened to EP?Decreased

What happened to EQ?Increased

So we can generalize and say if S EP EQ 2012, TESCCC

• Show what would happen if the Surgeon General announced that toothpaste was harmful to your heart.

Change in Demand or Change in Supply?2012, TESCCC

• Product: ToothpasteS1D1\$QE1 2012, TESCCC

• Product: ToothpasteSD1\$QE1EP2 EQ2D2EP1EQ12012, TESCCC

• What happened to EP?

What happened to EQ?

2012, TESCCC

• Both decreased.

We can generalize and say if

D EP EQ 2012, TESCCC

of 34

Embed Size (px)
Recommended

Documents

Documents

Documents

Documents

Documents

Documents